A seller is considering extending trade credit to an existing customer that buys on cash terms. The customer has just pl

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A seller is considering extending trade credit to an existingcustomer that buys on cash terms. The customer has just placed asales order (cash terms) for immediate delivery of 100 units at asales price per unit of $20. The customer states that they willincrease their sales order by 10 units if they receive a 60-daycredit period. Variable costs are $5 per unit and involve animmediate cash outflow. The seller believes that there is a 2%probability that the customer will default on the trade creditobligation. If the seller has an annual opportunity cost rate of3.65%, what is the NPV of extending credit to the customer?
Select one:
a. -$93.14
b. $93.14
c. $1593.14
d. $1,606.00